Measuring the impact of investment in the community: where are we at, and where are we going?

Promoting the education of young people through Vocational Training, bringing running water to regions where it is needed, and supporting recycling and environmental management projects. There are many ways to make a positive mark on one’s surroundings and contribute to creating a more egalitarian, more sustainable society. Many of these are within companies’ reach.

Investing in the community is an increasingly important action on the roadmaps of many companies. Doing so generates social value and enhances the very impact of business actions. But to have a real effect, it’s important to understand what social action is and the terrain we’re acting in, the effort companies are making and what they’re focusing their actions and investments on.

Responding to these questions is one of the goals of the ‘2022 Annual Report of the LBG Group Spain,’ which includes data on activities and actions by companies belonging to this group, which is coordinated and promoted by the sustainability consultancy MAS Business. Understanding the reality behind this data lets us know the present and design measures to act in the future.

From education to the environment

Company investment in the community must meet three criteria: it must be a voluntary action, where no contractual action is involved; it must have a social or environmental purpose; and more importantly, it should target beneficiaries not directly linked with the company. That is, your beneficiaries should not be employees, customers, or suppliers. These three principles show us something fundamental: these actions of investing in the community go beyond the business.

Currently, education is the main area of action that companies are focusing on. This is clear in the numbers: in 2022, 42% of investments from companies in the LBG Group Spain were meant for this area. Many of these companies have, for example, dual professional training projects that transform society by training students. It is also common for companies to grant scholarships or financial aid.

The second most significant area of action is that related to socio-economic development. Many companies carry out actions that encourage the growth of communities not only in Spain but also in regions like South America or Africa. There, initiatives to ensure access to water or transportation infrastructure are essential to improving the population’s well-being and quality of life.

One example of these actions is the social infrastructure program that Ferrovial has been carrying out for years. These projects support communities with basic sanitation and water supply needs, to name just two.

In 2022, support for economic development actions accounted for 17.4% of the community investments made by the companies in the LBG Group Spain. This percentage is followed by 12% dedicated to social welfare, 8.6 % to humanitarian aid, and 8.5 % to environmental projects, among others.

Upward trends

The LBG España Group was formed in 2007 with 9 companies (Abertis, Agbar, Barclays, BBVA, Ferrovial, Gestamp, Iberdrola, Repsol, and Telefónica), and since then, the data in the Group’s annual report has conveyed an upward trend in investment in the community. The figures have gradually increased from 2016 to today – with significant variations in 2020, when the COVID-19 pandemic totally changed the objectives and priorities of social action.

In 2022, more than €500 million were allocated to actions with an impact on the community, an average of €784 per employee. The previous year, 2021, the figure had fallen slightly below €440 million. In addition, 15 of the 18 members of the group who reported information about these actions in 2022 increased their investment in the community by more than 2.5%. That’s almost 80% of members. The impact achieved was measured in 24.3% of the direct beneficiaries. 11% saw their reality transformed, 58% experienced an improvement in their living conditions and 31% had an impact of awareness.

Behind this data, the MAS Business team checks that all the information coming from the companies is correct and that it can therefore be used to draw useful, realistic trends.

The challenges of the near future

Of the 18 companies that reported their measurements on investments in the community, only seven shared information about their impacts. Accounting for the impact involves a greater expenditure of resources and more dedication, and it is not easy for companies to have the necessary means to rigorously follow-up. In fact, some entities do measure their impact, but they prefer not to publish their conclusions because they do not have enough certainty regarding their data.

At the other extreme are the companies that do have the ability and certainty to publish their trends. One of the great challenges for the coming years is for all companies to reach this maturity and level of certainty.

If we stick to the companies analyzed in the report, the trends show their commitment. The very presence in the LBG Group Spain is already a sign of interest. In recent years, the effort to make sound investments, to improve impact measurement, and above all, to know what positive repercussions the actions are really having in society has increased. Today, it is no longer enough to invest; companies demand to understand and measure the impact they can have.

The successful experience of nearly 20 companies collaborating in a multisectoral group to achieve a common and comparable methodology undoubtedly lays the foundation for facing, hopefully, the challenges that the future presents us.